(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

Common Stock, no par value 12,652,150
-------------------------- ----------------------------
Class Number of Shares Outstanding
(as of May 13, 1998)

The accompanying unaudited financial statements have been prepared by Mackie
Designs Inc. (the "Company") in accordance with generally accepted accounting
principles for interim financial statements and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of the Company's
management, all adjustments (consisting of normal recurring accruals) necessary
for a fair presentation have been included. The results of operations for the
three month period ended March 31, 1998 are not necessarily indicative of
future financial results. For further information, refer to the financial
statements and footnotes thereto for the year ended December 31, 1997 included
in the Company's Form 10-K filed with the Securities and Exchange Commission.

2. INVENTORIES

Inventories at March 31, 1998 and December 31, 1997 consisted of the following:

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

The following information contains certain forward-looking statements that
anticipate future trends or events. These statements are based on certain
assumptions that may prove to be erroneous and are subject to certain risks
including, but not limited to, the Company's ability to introduce new products,
the concentration of the Company's current products in a relatively narrow
segment of the professional audio market, technological change and increased
competition in the industry, the Company's ability to manage its rapid growth,
its limited protection of technology and trademarks, various factors that impact
the Company's international operations including economic conditions in various
countries, custom and tariff regulations, currency fluctuations and lower gross
margins, the Company's dependence on a limited number of suppliers and on its
network of representatives and distributors, and its dependence on certain key
personnel within the Company. Accordingly, actual results may differ, possibly
materially, from the predictions contained herein.

The Company derives its operating revenue from worldwide sales of audio mixers
and other professional audio equipment. Sales outside the U.S. account for a
significant portion of the Company's total sales. International sales volumes
have historically been affected by foreign currency fluctuations relative to the
U.S. dollar. The Company prices its products in U.S. dollars worldwide. When
weaknesses of local currencies have made the Company's products more expensive,
sales to those countries have declined.

The Company's gross margins are also affected by its international sales.
Typically, gross margins from exported products are lower than from those sold
in the U.S. due to discounts offered to the Company's international
distributors. These discounts are given because the international distributor
typically incurs certain expenses, including technical support, product service
and in-country advertising, that the Company normally incurs for domestic sales.
The Company offered its international distributors a weighted average discount
of approximately 8.1% in 1995, 12.7% in 1996, 14.8% in 1997, and 14.9% in the
first three months of 1998. The increase in discounts is attributable to the
fact that the Company increased its discounts to international distributors
after it terminated the services of its exclusive representative for sales to
international distributors in 1995 and began supervising international marketing
and sales internally. The increase in discounts in 1997 and the first three
months of 1998 is also attributable to additional discounts offered on certain
products. In conjunction with the increase in discounts, the Company also
eliminated the commissions it was paying to its international representative.
While the Company has eliminated these commissions, the Company has incurred and
will continue to incur additional expenses associated with managing the
international marketing and sales of its products. Sales outside the U.S.
represented approximately 34%, 38%, 38%, and 25% of the Company's net sales in
1995, 1996, 1997 and the first three months of 1998, respectively.

The Company's gross margins are also affected by the purchase of some components
abroad. As a result of fluctuations in the value of local currencies relative
to the U.S. dollar, some of the Company's international component suppliers have
increased prices and may further increase prices. The Company currently does
not employ any foreign exchange hedging strategies, but may employ such
strategies in the future.

The Company's gross margins have fluctuated from time to time due primarily to
inefficiencies related to the introduction and manufacturing of new products and
inefficiencies associated with integrating new equipment into the Company's
manufacturing processes. Historically, fluctuations have also resulted from
increases in overhead associated with each of the Company's several relocations,
varying prices of components and competitive pressures.

7

The Company plans to introduce new products and product revisions at a more
rapid rate than it has in the past. Some anticipated new products will require
the implementation of manufacturing practices with which the Company is not
familiar. This could result in lower margins as the Company becomes more
familiar with new manufacturing procedures.

RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 1998 AS COMPARED WITH QUARTER ENDED MARCH 31, 1997

Net sales increased 3.3% to $17.4 million in the first quarter of 1998 from
$16.8 million in the first quarter of 1997. The increase in sales was primarily
attributable to sales from products introduced in the last twelve months (the
HR824 active studio monitor and the HUI-Registered Trademark- digital audio
workstation controller), partially offset by a decrease in sales of certain
other product lines. Sales outside the United States decreased to 25% of the
Company's total net sales in the first quarter of 1998 from 41% in the first
quarter of 1997. This decrease was primarily due to economic conditions and
competitive pressures in certain parts of the world.

Gross margin increased to 39.4% in the first quarter of 1998 from 38.1% in the
first quarter of 1997. The gross margin percentage increased due to a decrease
in the percentage of sales from outside the United States which caused a
decrease in the discounts offered to international distributors. Additionally,
the increase in gross margin percentage was due to improved manufacturing
efficiencies when compared with the first quarter of 1997.

Marketing and sales expenses increased to $2.6 million in the first quarter of
1998 from $2.3 million in the corresponding period of 1997. This increase was
due primarily to increased marketing and sales staff, and increases in other
various expenses. As a percentage of net sales, marketing and sales expenses
increased to 15.0% in the first quarter of 1998 from 13.8% in the corresponding
period of 1997.

Administrative expenses increased to $1.6 million for the first quarter of 1998
from $1.1 million for the corresponding period of 1997. This increase was due
primarily to increased administrative staff, and increased legal expenses due to
the lawsuit filed by the Company against certain parties alleging infringement
of its intellectual property rights (see Part II, Item 1. "Legal Proceedings" in
this Form 10-Q). As a percentage of net sales, these expenses were 9.3% in the
first quarter of 1998 compared with 6.7% in the corresponding period of 1997.

Research and development expenses decreased to $1.1 million in the first quarter
of 1998 from $1.5 million in the corresponding period of 1997. As a percentage
of net sales, these expenses decreased to 6.3% in the first quarter of 1998 from
8.7% in the corresponding period of 1997. This decrease was due primarily to
decreases in prototype and other expenditures.

Interest income decreased to $168,000 in the first quarter of 1998 compared with
$213,000 in the first quarter of 1997 due to a lower average cash balance.

The provision for income taxes for the first quarter of 1998 of $496,000 is
based upon an expected overall effective rate for 1998 of 30%. The provision
for income taxes for the first quarter of 1997 of $561,000 was based upon an
expected overall effective rate for 1997 of 33%. The decrease in the expected
overall effective rate in 1998 compared with 1997 is due to the increased
benefits provided by the Company's foreign sales corporation and the research
and development tax credit.

LIQUIDITY AND CAPITAL RESOURCES

8

During the first three months of 1998, the Company's operating activities
generated cash of $1.6 million. Accounts receivable, net of allowances,
increased slightly to $11.0 million at March 31, 1998 from $10.6 million at
December 31, 1997. Inventory levels increased to $18.6 million at March 31,
1998 from $17.8 million at December 31, 1997 due to increased inventory
quantities of finished goods. Net cash provided by investing activities totaled
$450,000 during this period, attributable to net proceeds from marketable
securities of $956,000 and net purchases of furniture and equipment of $506,000.
During this same period, the Company repurchased 81,000 shares of its own stock
at a total cost of $536,000.

The Company has entered into a business loan agreement with a bank which
provides three credit facilities to the Company, including a $5.0 million
unsecured line of credit to finance any unexpected working capital requirements.
The line of credit bears interest at the bank's prime rate, or at a specified
IBOR rate plus 1.5%, whichever the Company chooses. The agreement also provides
a $2.5 million credit facility for capital equipment purchases or general
corporate purposes. Certain terms under this facility, such as interest rate,
repayment period and collateral, will be determined at the time advances are
made to the Company. The Company also has a $1.75 million line of credit for
the purchase of foreign exchange contracts. There were no borrowings
outstanding on any of the bank credit facilities at March 31, 1998. These
credit facilities expire June 30, 1998. Under the terms of the business loan
agreement, the Company must maintain certain financial ratios and tangible net
worth. The Company is in compliance with all such covenants. The agreement
also provides, among other matters, restrictions on additional financing,
dividends, mergers, and acquisitions. The agreement also imposes an annual
capital expenditure limit of $10 million.

Although the Company cannot accurately anticipate the effects of inflation, the
Company does not believe inflation has had or is likely to have a material
effect on its results of operations or liquidity.

9

PART II . OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In June 1997, the Company filed a lawsuit against certain parties,
including one of the Company's major competitors and a major dealer of the
Company's products, alleging infringement of its intellectual property
rights. Defendants include Behringer Spezielle Studio-Technick GmbH
("Behringer"), Ulrich Bernard Behringer, Sam Ash Music Corporation, Samson
Technologies Corporation ("Samson"), Richard Ash and Scott Goodman. The
suit claims damages in the amount of $327 million. Cases are pending in
the United States District Court for the Western District of Washington,
the Eastern District of New York, and a local court in the United Kingdom.
On April 22, 1998, Samson lodged two counterclaims in the same action in
which the Company has sued Samson for infringement of the Company's
intellectual property rights. The first counterclaim seeks a declaration
that Samson has not infringed to registered Company trademarks, and that
such trademarks are invalid. The second counterclaim seeks in excess of
$10 million in damages for alleged defamation of Samson by the Company.
While the Company intends to vigorously prosecute its claims and defend
against counterclaims, there can be no assurance that the Company will
prevail in any of these actions.